JPMorgan Signals Potential for Short Squeeze in Three Favorite Stocks

In the current financial landscape, individual investors are focusing on potential short squeeze candidates. JPMorgan has identified three companies that are currently of interest to retail investors and are also experiencing increased short selling activity from institutional sides. Such a configuration can serve as a foundation for a short squeeze, where increased investor demand forces short sellers to close their positions and buy back shares, often leading to rapid price increases. According to Arun Jain, analyst at JPMorgan, there are three firms where retail customers have recently increased their purchases while they are also targeted by short sellers: Investors were particularly optimistic about Cipher last week, purchasing stocks worth $14.2 million. TeraWulf has the highest percentage of outstanding short positions, accounting for 40% of the traded shares. It is followed by Nuvation with 28% and finally Cipher with 20%. "This newly awakened buying interest comes despite the increased vacancy (~20% of the free float) and weaker mining revenues and profits in the second quarter of 2025," said Jain about Cipher's stock. While short sellers' interest in Cipher recently declined, TeraWulf saw an 8% increase in short sales last month. Cipher experienced a 10% jump in pre-market trading on Thursday after it was announced that Google would acquire a stake in the company as part of a deal with the AI platform Fluidstack. TeraWulf experienced a similar price increase after a comparable agreement was reached the previous month. However, Cipher ultimately reversed on Thursday and fell by 15% as the market approached the closing bell. Determining which stocks generate specific interest among individual investors is often difficult, but Cipher and TeraWulf could be particularly appealing due to their connections to the crypto mining market. Particularly on social media, Cipher has maintained a stable positive sentiment in recent months, as the sentiment index from Swaggystocks shows. In contrast, the data for TeraWulf indicates a recently weakened sentiment.